Pierre-Olivier Pineau

What is there to gain from a common energy policy?

There are environmental and economic gains to be made from a common energy policy. First, as environmental problems do not stop at political borders, especially GHG, provincial policies lack scale and coordination to maximize their positive impacts.

Second, from an economic perspective, provincial policies create market access barriers and other pricing distortions preventing optimal energy choices. This is the standard economic principle that government intervention in markets, unless justified by a negative externalities, should be minimized. In pricing decisions, especially in electricity, government create many distortions leading to price signals geographically and even provincially (internally) inconstant.

A common energy policy has the potential to improve energy- related environmental and economic outcomes.

What are the political, technical and economical hurdles, challenges and transformations for such a policy?

Provinces have a hard time discussing energy policies. In the best illustration of this may be the blank chapter on energy in the Agreement on Internal Trade: since this intergovernmental trade agreement signed by Canadian First Ministers that came into force in 1995, nothing more than the development of a “draft text” could be mentioned in the September 2014 progress report (see http://www.ait-aci.ca/index_en/progress.htm).

This can be explained by constitutional reasons (provincial area of power), which have led to the development of provincial habits and institutions (especially in the electricity sector), and in many cases the development of a strong provincial “electricity identity”. “Hydro-organizations” are often considered provincial treasures, making any change extremely politically sensitive.

If environmental and economic benefits could be more widely understood, the energy policy inertia Eastern Canada suffers from could evolve into a more dynamic, coherent and performing sector.